A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 31) 2000

Overview

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 31) 2000, as amended, was enacted to address the need for specific guidelines on the issuance of recipient created tax invoices (RCTIs) by recipients of taxable supplies under the Goods and Services Tax (GST) framework. This legislative instrument was prepared by the Goods and Services Tax Centre of Expertise, Australian Taxation Office, and came into effect on 1 July 2000, aligning with the commencement of the A New Tax System (Goods and Services Tax) Act 1999. The determination was made under the authority of the Act and the Acts Interpretation Act 1901, and its purpose is to outline the conditions under which a recipient can issue an RCTI, particularly for publishers of author's publications. The policy objective is to ensure compliance with GST requirements while allowing flexibility for certain classes of recipients to issue tax invoices on behalf of suppliers. The determination specifies that a publisher, as the recipient of a taxable supply, may issue an RCTI for an author's publication if certain criteria are met, including the establishment of the supply's value as a royalty based on sales and adherence to the outlined requirements. These requirements include being registered for GST, setting out the supplier's ABN in the tax invoice, timely issuance of the invoice and adjustment notes, compliance with tax obligations, and the existence of a written agreement or an embedded agreement within the RCTI itself. The determination also includes provisions for notifying the Commissioner of the intent to use RCTIs and prohibits the issuance of RCTIs under non-compliant circumstances.

Scope and Application

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 31) 2000, as amended, applies to entities that are not previously determined as being able to issue a tax invoice for a class of tax invoices that may be issued by a recipient. Specifically, this determination applies to publishers who are recipients of a taxable supply in the context of author's publications. These publishers can issue a recipient created tax invoice (RCTI) provided they meet certain criteria, such as establishing the value of the taxable supply as a royalty based on the value of sales of the author's publication. The determination outlines several requirements that must be satisfied by the recipient, including being registered for GST, setting out the supplier's ABN in the tax invoice, and ensuring compliance with obligations under the taxation laws. Furthermore, the recipient must either have a written agreement with the supplier or an embedded agreement within the RCTI itself, stipulating that the recipient can issue tax invoices for the specified supplies, and that the supplier will not issue tax invoices for those supplies. This determination is applicable nationally across Australia and was made under the A New Tax System (Goods and Services Tax) Act 1999 and the Acts Interpretation Act 1901.

Key Provisions

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 31) 2000 (the Determination) provides that certain publishers who are recipients of taxable supplies can issue tax invoices. Specifically, under section 4, a recipient who is a publisher can issue a tax invoice for the supply of an author's publication where the supply is valued as a royalty based on the sales of the publication. To be able to issue such a tax invoice, the recipient must meet the requirements set out in section 5 of the Determination. The Determination imposes several obligations on recipients who may issue tax invoices. Under section 5(a), the recipient must be registered for GST. Additionally, the tax invoice must contain the supplier's ABN (section 5(b)). The recipient must issue the original or a copy of the tax invoice to the supplier within 28 days of making or determining the value of the taxable supply and retain the original or copy (section 5(c)). The recipient must also issue an adjustment note to the supplier within 28 days of any adjustment and retain the original or copy (section 5(d)). The recipient must reasonably comply with its obligations under the taxation laws (section 5(f)). Furthermore, the recipient must either have a written agreement with the supplier (section 5(f)(i)) or an agreement embedded in the tax invoice (section 5(f)(ii)) specifying the supplies to which it relates, among other things. The recipient must also notify the Commissioner if it has been carrying on an enterprise as a publisher for less than 12 months (section 5(h)). Breaches of the requirements under this Determination may result in penalties and consequences. Although the Determination does not specify maximum penalties, breaches of the underlying A New Tax System (Goods and Services Tax) Act 1999 may attract civil or criminal penalties. For instance, section 29-5 of the Act provides that a person who knowingly or negligently makes a false or misleading statement in a tax invoice commits an offence. Under section 29-6, a person who is found guilty of an offence under section 29-5 is liable to a penalty of 100 penalty units, or in the case of a corporation, 500 penalty units. Other sections of the Act provide for both civil and criminal penalties for various breaches, with penalties ranging from fines to imprisonment. Therefore, while the Determination itself does not specify maximum penalties, it is clear that breaches of its requirements may have serious legal consequences under the broader tax legislation.